Digital in China: QQ, E-Commerce, Mobile Web in T3/4

The world’s largest IM service by member base and without a doubt the one with the greatest social impact is celebrating its 14th birthday with a campaign based on the themes of memories.

The campaign called “QQ memories” shows how QQ has been by users’ side throughout the last 14 years, a period during which both QQ users and China as a whole have gone through massive changes. On the microsite dedicated to the operation, users are encouraged to use the hashtag #feeling love by my side# (感受爱在身边) to tell through Tencent Weibo their own stories of how QQ allowed them to build strong memories and stay connected to the people who mattered to them. Users can also submit videos that represent the ideas of connection and memories. The two most viewed videos tell the stories of a couple re-uniting after going over their QQ chat history and a war veteran re-connecting with his army buddies through QQ.

First of all, this campaign is an occasion to look back at QQ’s history as a silent innovator in web business models: with QQ, Tencent (the parent company behind the IM tool) created an innovative service supported by a product that was and remains specifically tailored to the needs of Chinese web users and the constraints of the technical environment. QQ was also amongst the first to explore new avenues for monetization through virtual goods, virtual currencies and social gaming. Even its QZone blogging platform can be seen as China’s first large-scale social network. QQ was also an early arriver in mobile and is probably a major reason for which IM is the first activity on the mobile web in China.

Then, the theme of this campaign highlights another specificity of web in China: its social impact and place in popular culture. Many factors explain why the emotional imprint of the web in China is stronger than elsewhere. Amongst these factors we can cite the parallel between the rise of the internet and the “re-emergence” of China as a strong nation with a vibrant society and the role of web platform in allowing youths facing high parental expectation and a stressful academic environment to create social connections and build their identities.

Chinese web services have long since used emotional, inspirational messages to support their brand (RenRen for example launched campaigns based on the idea of reuniting with one’s school palls). While this may seem like a remote concern for marketers, it greatly matters for it explains why the internet is so deeply imbedded into daily life habits and customer behavior, even amongst low-income classes.

New figures show explosion of e-commerce in 2012

As 2012 draws to an end, several news items show how e-commerce has exploded over the last 12 months.
In China, November 11th is called “singles’ day”. It is also an online shopping holiday created by TMall in 2009, where certain brands on the B2C platform offer 50% off discounts. In 2012 on that day alone, Alibaba, the parent company of TMall, generated a total of 19.1 billion RMB ($3.07 billion) in sales. Netizens all over the country keenly took advantage of the massive discounts offered by e-commerce websites on that day, creating bottlenecks in logistics and that resulted in nightmarish situations for China’s delivery companies.

Later that month, new figures were released that showed sales for the aforementioned Taobao and T-Mall reaching 1 trillion RMB (about $160 billion) for 2012. That is the equivalent of each Chinese person spending 769RMB ($122) on the site during the year, a truly remarkable figure for a country where internet penetration is still below 50% and average household income is only a fraction of that of western countries.

These figures illustrate how important e-commerce has become for Chinese customers not only as a source of good bargains but as a quality, entertaining shopping experience. This makes it more pressing for brands to think about how this channel fits into their strategy, especially given the importance of e-commerce in T2+ inland cities that are the key battlegrounds of tomorrow and in which many brands still have a feeble retail presence. Figures from Alibaba show that growth in traffic and spending is coming from 3rd and 4th tier inland cities.

What are the customer groups that can best be reached through e-commerce channel? What kind of mix between brand-owned e-commerce and 3rd party platforms? What type of product mix? How to integrate e-commerce into the social media presence? All of these questions must be addressed heads-on for brands to achieve success in tomorrow’s marketplace.

Study shows how engaged in the mobile web T3/4 consumers are

At the beginning of the month, media agency GroupM released the latest series of findings of its “Project deep dive” study aimed at understanding the behavior of Chinese consumers in lower tier cities, where populations often dubbed the “next frontier” for brands because unlocking their considerable spending potential requires companies to adapt their products and business models in a way that reflects these populations’ very particular mindset and lifestyles.

A key part for brands of tailoring their approach to lower tier city consumers rests in adapting the marketing mix to leverage the channels that are most influential amongst these groups.

According to GroupM’s data, customers in lower tier cities spend less and less time in front of their TV and TV’s daily reach amongst customers aged 15 to 45 is falling even more quickly than in Tier 1 cities (from 94% in 2009 to 81% today).

Most importantly, digital media is on the rise in Tier 3 and Tier 4 cities with usage rates amongst individuals aged 15 to 45 growing 18% per year (vs 3% in T1 cities) to reach 59%. Mobile internet’s growth is even more staggering: from 2009 to 2012 the number of people accessing the web through a mobile device has shot up 351% and lower tier city mobile web users spend an average of nearly 13 hours per week surfing the mobile web. More impactful is the fact that smartphones are now the most popular device (20%) well above feature phones (12%) and their share of usage has quadrupled over the past year.

This set of data confirms what we have long maintained: the importance of the mobile web in influencing lifestyles and behavior amongst lower tier consumers is tremendous and requires brand to develop mobile journeys that are suited to both local consumer mindset (pragmatism, focus on value, tendency to go through a long period of pre-purchase comparison, higher levels of trust for ads etc…) and technical environments (domination of the Android eco-system, absence of centralized app-shops, lower mobile internet speed, importance of mobile web browsing etc…).